Study: Detroit Regional Economic Growth Slowing, Lagging Behind Nation/Peers

December 5, 2019

Crain’s Detroit Business

Dustin Walsh

Despite progress in recent years, Southeast Michigan continues to lag behind the nation in its economy, education, employment, population and other key indicators, according to the annual State of the Region report released Thursday by the Detroit Regional Chamber.

“Our regional economy continues to grow … but in many areas we lag our peers, we lag the nation,” Sandy Baruah, the chamber’s president and CEO, said in a call with reporters.

Key findings include:

  • The labor force participation rate of the Detroit MSA improved 0.3 percent in 2018, compared to 0.1 percent growth in the U.S. But Detroit remains the lowest among major metropolitans at 62.6 percent and below the national average of 63.3 percent.
  • Private sector job growth continues to lag, with the Detroit region growing 1.4 percent in 2018, below the national average of 1.9 percent. Between 2014-2018, private sector job growth in the region was 7.7 percent, but still below the national growth rate of 8.2 percent.
  • Per capita income growth for the region slowed last year at only 2.5 percent, versus the national average of 4.4 percent. However, the region outperformed the national growth rate of 17.1 percent between 2014-2018 with a growth rate of 18.2 percent.
  • Residential construction permits plummeted in 2018 by 29 percent in the Detroit region, compared to 3.6 percent growth nationally. Median home values continued to grow last year at 5.1 percent, but below the national average of 5.6 percent. Since 2014, however, the region outpaced the national average and peer cities including Cleveland, Chicago and Boston.
  • Population growth also slowed, down to 0.1 percent in 2018 compared to 0.6 percent nationally. However, millennial generation population growth exceeded the nation last year at 2.5 percent versus 0.8 percent.
  • The region continues to lag behind peer cities in educational attainment, with an annual increase in those with undergraduate and graduate degrees by 1.9 percent in 2018 versus 2.7 percent nationally. Only 40.7 percent of Michigan adults hold a college degree, below the national average of 41.2 percent and below cities like Cleveland, Chicago, St. Louis and Atlanta.
  • Despite increasing focus education and employment in science, technology, engineering and math, the Detroit region’s job growth in STEM is behind the nation at 1.4 percent in 2018 compared to 2.1 percent nationally. However, it’s outpaced the nation since 2014 with a growth rate of 10.6 versus 9.9 percent.

The state and region is also being negatively impacted by national issues, such as the White House’s various trade disputes, Baruah said.

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Detroit Chamber: Metro Students Must Finish Degrees to Find Good Jobs

December 4, 2019

Bridge Michigan

Alexandra Schmidt

Many Detroit-area students are not prepared to work where they live.

According to the Detroit Regional Chamber’s first-ever State of Education Report, released Thursday, students are dropping out of the region’s education system at every stage, resulting in a talent pool without the accreditations local employers want.

It’s a “flashing light” on the region’s dashboard, said Sandy Baruah, President and CEO of the Detroit Regional Chamber, at a Wednesday conference call about the report. “Our leaky education pipeline is a huge challenge for our region today and going forward.”

It’s a vexing issue that played out nationally in 2018 when Amazon bypassed billions of dollars in tax incentives to locate HQ2 in Detroit. The company cited concerns with the lack of skilled workers in the region, compounded by a fear the region’s lack of mass transit would hobble its ability to attract outside talent.

“In order for our businesses to succeed, for our economy to succeed, for our communities to succeed, we need people to fill those jobs,” Baruah said.

Completion rates lag behind enrollment

“One of the most impactful metrics we found” was the number of Detroit-area residents that don’t earn a postsecondary degree within six years, said Tammy Carnrike, chief operating officer at the Detroit Regional Chamber. That can be a major impediment in a job market that is increasingly demanding a credential beyond high school.

It’s not that students aren’t enrolling in postsecondary programs — it’s that they aren’t finishing them.

Across metro Detroit, students actually enroll in two- and four-year program at a slightly higher clip than across the nation. But across the region, nearly half of students who start a postsecondary degree have not completed it six years later.

Enrollment and completion rates are even lower for students from the city of Detroit specifically. Fifty-seven percent of city residents enroll in a postsecondary program after high school, compared to the national enrollment rate of 67 percent. Six years later, nearly three out of four students still haven’t completed their degree.

A web of factors contributes to these noncompletion rates.

Sometimes high school graduates are not ready for the increased rigor of college courses. Less than 10 percent of city of Detroit high schoolers are considered college-ready based on their ACT and SAT scores. This is lower than the regional average (36 percent), the statewide average (35 percent), and the national average (51 percent).

It’s an issue the chamber ran into with students participating in the chamber’s Detroit Promise program, which helps cover the cost of tuition and fees of postsecondary programs for Detroit graduates from the class of 2017 who meet certain residential and educational requirements.

“A lot of our two-year students who take advantage of free tuition take a lot of their credits in those two years taking remedial courses. And that’s an indicator they are not leaving high school with a level of postsecondary readiness,” said Baruah.

Some research shows that taking remedial courses actually makes students less likely to complete a postsecondary program, given that the courses demand time and financial resources that do not directly contribute college credits toward the completion of the degree.

Other times, life itself gets in the way.

Car repairs that sap tuition savings, food insecurity, unreliable childcare — all of life’s standard hurdles can get in the way of students completing their degrees. Recently, schools across the state have tried to help vulnerable college students overcome these bumps, from “life needs” scholarships to additional academic advising and community support, with some success.

The high number of residents not completing post-high school degrees has resulted in nearly 700,000 residents across the region who have some postsecondary credits, but no credentials to show for it.

Uncompleted degrees: hurdle or potential powerhouse?

The State of Education report highlights the high cost of lower educational attainment, both for students and the region.

Residents without a degree are less likely to get a job, and they make less money if they are employed. Eight-one percent of the region’s jobs went to candidates with some type of postsecondary credential since 2010, while sixty-nine percent of working-age Detroiters without a high school diploma are either unemployed or not in the workforce.

On top of this, many of the fastest growing parts of Detroit’s economy, such as engineering and business, require a two- or four-year degree that residents struggle to attain. This trend is expected to continue, and would widen the gap between the credentials that the region’s residents have and what local employers want from prospective workers.

The personal financial stress correlated with lower educational achievement is exacerbated for students who took out student loans for programs they didn’t finish. They may have the loan debt associated with a postsecondary degree, but not the wage boost associated with actually earning a degree.

It’s a situation faced by millions of Americans across the country, who are three times more likely to default on student loans than those who finish their degree.

On the flip side, said Carnrike, the nearly 700,000 adults across metro Detroit with an incomplete degree are closer to earning a certification than residents who have never started a program.

“It’s not just students coming out of school, but adults returning to school as well,” Carnrike said.

She says employers can play a major role in providing employees with the support necessary to return to school. Employers will have to start asking themselves, “What can I do to make it easier for my employees who haven’t earned their degrees?”

Metro Detroit has a lot to gain if employers start thinking that way, Carnrike said.

A 1 percent increase in the number of people earning a bachelor’s degree would increase the per-capita income in the region by $1,250, according to the chamber’s report. It also estimates that if the metro Detroit reaches a point where 60 percent of residents have a postsecondary credential by 2030, “the region will see an estimated return on investment of $42 billion.”

Chamber launches new compact

“As a business leader I am hearing a lot about” the lack of qualified home-grown talent, said Richard Hampson, Michigan president of Citizens Bank, at a conference call Wednesday to discuss the report.

“I think numbers like the $42 billion dollar [return on investment] … will get the attention of business leaders,” Hampson said.

While he says many businesses are already impacted by the issue and want to be a part of the solution, Hampson said “more visibility of the data” presented in the chamber’s report “will lead to more business leaders wanting to be a part of it.”

That is exactly what the chamber said it is hoping for.

“One of the first and foremost actions,” the chamber plans to take following the release of the report “will be putting together a compact” through their Detroit Drives Degrees Program, says Carnrike.

The chamber’s new Detroit Drives Degrees Talent Compact aims to be a collaborative effort among regional educational institutions, businesses and nonprofits to break down barriers to postsecondary educational attainment.

“All this information that we’re presenting is years and years built up. And we’re not going to be able to turn it around immediately,” Carnrike said, but “we have to do a better job” of “getting students into college and keeping them there.”

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Chamber Addresses House Transportation Committee on Regional Transit

Yesterday, the Michigan House Transportation Committee heard testimonies on House Bill 5229 which would amend the Municipal Partnership Act. This legislation would work to reinvigorate regional transit efforts in Southeastern Michigan and advance funding. Chamber Vice President of Government Relations Brad Williams testified before the committee, stating that the talent needs of Chamber member companies are dependent upon public transit to move people across cities.

This video is of testimony from the State of Michigan House of Representatives Transportation Committee and was originally livestreamed on House TV. Watch the full committee meeting here. 

Chamber Honors Wayne State University President M. Roy Wilson with “Excellence in Education Leadership Award”

The Detroit Regional Chamber founded the “Excellence in Education Leadership Award” to recognize educators who demonstrate outstanding public service and leadership on behalf of the region. The award was inspired by the legacy of the outgoing University of Michigan-Dearborn Chancellor, Daniel Little, who was the first recipient in 2018. This year, the Chamber’s Greg Handel, vice president of Education and Talent Initiatives will award Wayne State University (WSU) President M. Roy Wilson as the second inaugural recipient of the Excellence in Education Leadership Award.

President Wilson has demonstrated exceptional commitment to better serving his students – Detroit’s future talent base – and fulfilling the important role his institution has in catalyzing regional economic development. Under his leadership, WSU has garnered national attention for their new approaches that has lifted the university up as one of the most innovative universities in the country.

Notably, the Chamber recognizes President Wilson, Provost Whitfield and their colleagues for:

  • Achieving one of the nation’s fastest-growing graduation rates, while significantly reducing racial equity gaps at the same time;
  • Launching pioneering programs like Warrior Way Back to provide debt-forgiveness for adult returning students and the Heart of Detroit Tuition Pledge for Detroit high school graduates;
  • Advancing regional collaboration to improve education attainment through the Chamber’s Detroit Drives Degrees initiative. Wayne State has been instrumental in helping to scale change beyond even its own campus and led the way in earning Detroit’s distinction as a Lumina Foundation “Talent Hub.”

The award will be presented to President Wilson at an early reception during the Chamber’s State of the Region event, Detroit 2030: From Education Crisis to Talent Hub at Ford Field on Dec. 5. Learn more.

Member of The Month November 2019: WeWork Detroit Empowers Entrepreneurs, Small Businesses and Global Startups, Aiding in Growth and Success

Editor’s note: The Detroit Regional Chamber’s Member of the Month designation recognizes a Chamber member working to grow the regional economy through innovative leadership in alignment with the Chamber’s programs or policy agenda.

WeWork Detroit was named the Detroit Regional Chamber’s Member of the Month for November for helping to empower entrepreneurs, small businesses, and global startups in Detroit by providing its shared workspaces that encourage idea-sharing, conversation, and connections, aiding in growth and success.

In early 2017, WeWork Detroit opened its two downtown locations, on Woodward Ave. in Campus Martius and on Clifford Street in Merchant’s Row, offering a total of 11 floors of coworking space to an array of industries.

In just two years, WeWork Detroit has played a role in reviving the entrepreneurial spirit in Detroit and has also contributed to the city’s recognition as a hub of technology innovation.

In October 2017, WeWork Detroit, along with the Detroit Regional Chamber and the Michigan Economic Development Corp., launched the PlanetM Landing Zone. Throughout this partnership, mobility startups focused on connected, autonomous, shared, and electric vehicle technology have relocated to Detroit, gaining access to Michigan’s automotive industry, testing infrastructure, talent, and research. This partnership is the first of its kind for WeWork Detroit, which offers the mobility startups office space at its Clifford Street location.

“We’ve been grateful to partner with PlanetM and the Chamber for several years,” said Kyle Steiner, community director for WeWork Detroit. “Industry partners, international companies, and startups have all come through the Landing Zone and many have moved into additional space in WeWork on their own, but in close proximity to all the activity of the Landing Zone. It’s been great to see,” said Steiner.

This year, WeWork Detroit announced its plan to open a third location in Detroit’s New Center area, leasing 91,000 square feet at 6001 Cass Ave. The expansion doubles WeWork Detroit’s footprint in the city.

“By having a presence, a bit north of downtown, we are opening ourselves up to a new group of companies who may find the location more desirable,” said Steiner. He continued to say, “Techtown has been there for some time and created a hub of entrepreneurial buzz. Now, with the Michigan Mobility Institute in partnership with Wayne State, we are entering into a neighborhood of innovation. We really want to add to that narrative and be a resource however we can be.”

Regional Leaders Showcase How Employee Well-being Programs Can Boost Business and Economic Growth

The Chamber’s “The Business Case for Community Health” gathered expert leaders to discuss ways to create a healthier region and its significance for talent and business attraction and retention. The event presented key data on well-being and considered how creating workplace well-being programs can reduce health care spending, improve employee productivity and behaviors, and decrease absenteeism.

People who thrive in all five well-being areas – purpose, social, financial, community, and physical – experience 41% less unhealthy days and are more engaged at work. Businesses who engage in employee health send a strong message to their communities.

“Retaining employees matters,” said Jay Brown, director of corporate social responsibility and economic relations at RPM – The Driving Force in Logistics. “Keeping employees happy, healthy, and productive in their roles will prevent employers from spending money on hiring and training less frequently.”

Resiliency is another crucial element of good well-being and employee retention. Those with higher states of resiliency still feel stress, they are just better at accepting and reacting to that stress, said Cindy Bjorkquist, director of health and well-being programs for Blue Cross Blue Shield of Michigan. That’s why our goals as employers shouldn’t be to eliminate stress but help build resiliency to manage it, she said.

Employees working in the health system have a unique challenge surrounding well-being. It’s vital for patient-care providers to make their own health a priority so they are better equipped to deliver a high level of care to others. Otherwise, the results can be harmful.

“It’s the classic airplane example,” said Beth Thayer, director of the center for health promotion and disease prevention at Henry Ford Health System. “You must first secure your own oxygen mask so that you can assist others.”

Seeing the benefits of workplace well-being programs takes patience. When measuring workplace well-being programs, employers should consider a holistic approach, including reviewing specific employee results and the financial return on investment.

“We look at health assessments and achievement scores, of course, but we also think about preventative care, presenteeism, and lower rates of employee mistakes while on the job due to improved well-being,” said Kathy Forzely, director of the department of health and human services for Oakland County.

“There is a difference between outcomes and impacts,” said Brown. “Outcomes are how many people signed up for the wellness program. Impacts are the results you might not see for the next decade.”

Command Sgt. Maj. Jerry M. Charles Assumes New Role at U.S. Army Tank-Automotive and Armaments Command

DETROIT, Michigan, Nov. 20, 2019 — The U.S. Army has named Command Sgt. Maj. Jerry M. Charles the TACOM Command. Sgt. Maj. Charles’ 26-year career includes a recent assignment as the Sgt. Maj. for Headquarters, U.S. Army Pacific Deputy Chief of Staff at Ft. Shafter, Hawaii, and operational deployments in support of Operation Enduring Freedom and two tours in support of Operation Iraqi Freedom. He holds a Master’s degree in Management and Leadership from Webster University.

Student Team Wins $2,000 In First-Ever UHY + Mike Ilitch School Of Business Tax Competition Or “Taxitition”

DETROIT, Mich. (November 20, 2019) – There are some things money simply can’t buy, and experience is one of them. Three students from Wayne State University’s Mike Ilitch School of Business received both – invaluable experience and money – after taking first place in the school’s first-ever “Taxitition” tax case competition.

This year’s winning team of finance and accounting students, aka the “Write-off Warriors,” David Borg, Brian Boeskool and Golam Tanzim, took home the top prize of $2,000.

In partnership with UHY, a leading national CPA firm with offices in Wayne, Oakland, Washtenaw and Macomb counties, the Ilitch School hosted the three-day case study competition Nov. 14-16. The goal was to help students learn why understanding taxes is so important in the corporate world.

“There is a huge unmet demand in the job market for tax accountants. This competition gave our students the opportunity to simulate real-world conditions in a friendly, competitive environment,” said Matthew Roling, Wayne State’s accounting department chair. “The teams had to be focused, creative and think on their feet. UHY’s investment in this program shows how much they care about our students’ success.”

The competition was broken into three parts. On day one, students gathered to hear about the case study and begin working on their presentations. On day two, they met with UHY mentors to review their progress with seasoned tax professionals and refine their answers. On the competition’s third and final day, the teams presented their solutions to a panel of judges comprised of UHY professionals and Ilitch School faculty. Each team had 20 minutes to present and a 10-minute Q&A session.

“We were impressed by all of the participants; their thought process and analytic skills exceeded our expectations. The winning team edged out their competitors by combining a strong advisory approach with a polished presentation,” said Tom Callan, CEO of UHY’s Great Lakes Region.

This year’s winning team earned a $2,000 cash prize as well as lunch with Callan at the Detroit Athletic Club. The second-place team earned $100 for each member.

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About WSU’s Mike Ilitch School of Business
The Wayne State University Mike Ilitch School of Business prepares students for challenging and rewarding careers, advances the boundaries of scholarly and practitioner knowledge, and enhances the economic vitality of the city of Detroit, the state of Michigan and beyond through its programs, research and community engagement. Established in 1946, the business school was renamed in 2015 in recognition of the $40 million gift from Mike and Marian Ilitch. Thanks to this lead investment, the school moved to a new state-of-the-art building in the heart of The District Detroit in 2018, and academic programming and collaboration with city businesses are expanding. For more information, visit ilitchbusiness.wayne.edu.

About UHY LLP
UHY LLP, a licensed CPA firm, provides audit and other attest services to publicly traded, privately owned and nonprofit organizations in a number of industry sectors. UHY Advisors provides tax and advisory services to entrepreneurial and other organizations, principally those enterprises in the dynamic middle market. UHY LLP, operating in an alternative practice structure with UHY Advisors, forms one of the largest professional services firms in the US. While that scale might provide confidence for some clients, others tell us our greatest value is the way we bring these resources to bear to help address today’s evolving business challenges. It’s a philosophy we call “The Next Level of Service”. To learn more visit www.uhy-us.com.